Analyst says New Jersey revenue estimate is still too high

Just weeks after Governor Christie lowered his revenue forecast for the state’s current $33 billion budget by $251 million, a non-partisan legislative fiscal analyst said his new estimate is likely still too high.

The governor could be off by $217 million – and by $526 million over the next 15 months, said David Rosen, budget expert for the Office of Legislative Services. Rosen was counting the remaining three months of this fiscal year and Christie’s projections for the next one.

Any gap between what the state spends and what it takes in has to be offset by spending cuts or other adjustments, because the state constitution requires the governor to maintain a balanced budget. And right now the surplus fund that could be used to hedge against any gap is little more than $300 million.

“That much of an error becomes significant when you have a built-in surplus that’s only 1 percent,” Rosen told members of the state Senate Budget and Appropriations Committee.

“You don’t have much coverage,” Rosen said. “When you’ve got a small surplus, then you’ve got to make corrections on the fly in order to cope.”

Christie, a Republican beginning his second term, has had to make midyear budget adjustments in several years to help offset overestimations in revenue projections. Those adjustments have included the roughly $700 million in cuts announced this year and last year’s delay of about $400 million in property tax relief.

His latest state spending plan calls for tax collections to grow by more than 5 percent through the end of June 2015 to support a $34.45 billion budget, the richest in state history.

Both Rosen and state Treasurer Andrew Sidamon-Eristoff appeared before the budget committee Tuesday to discuss the revenue forecast and other fiscal issues for the first time since Christie proposed his latest budget in February.

The meeting kicked off a series of hearings in Trenton over several weeks as lawmakers evaluate that $34.45 billion spending plan. They have to approve Christie’s budget or send him their own appropriations bill before July 1, the start of the state’s next fiscal year.

Rosen’s revenue forecast for the fiscal year is $309 million below the governor’s. And for the remaining three months of the current fiscal year, Rosen said, his projections are $217 million under Christie’s.

Rosen said the overall $526 million gap between his projections and the Christie administration’s is smaller than in years past, including in 2012, when Christie publicly called Rosen the “Dr. Kevorkian of the numbers” for a projection that undercut Christie’s calls at the time for an income tax cut.

The treasurer said dropping unemployment, rising personal incomes and an increase in home building are all reasons for the Christie administration to be optimistic and hold firm to its own projections.

“At this point we have a different view,” Sidamon-Eristoff said.

Rosen also said research by the Pew Charitable Trusts shows New Jersey’s recovery from the recession has lagged behind the national trend and those tracked in other states. Had New Jersey matched the national rate of recovery, there would be $3.3 billion more in revenue to spend, Rosen said, though he acknowledged some states, unlike New Jersey, hiked taxes to generate more revenue.

But Sen. Tony Bucco, R-Morris, said New Jersey’s already heavy tax burden, especially on the businesses that provide jobs, was also a factor.

“All of these fees and taxes that we pay add into that problem of making our bottom line look good,” Bucco said.

Both Rosen and Sidamon-Eristoff are scheduled to appear before the Assembly Budget Committee today.